- slide 1 of 4
The previous article explained that there are concerns about publicly available AMD technology used by the US military making its way from the UAE, whose government (via Mubadala and ATIC) wants to take a major stake in AMD and the new Foundry Company, to Iran. We addressed some of these, but the fact remains that the AMD deal is possibly, in terms of business done with the military, more contentious than the 3 Com/Huawei deal CFIUS blocked earlier this year.
To avoid this argument, or the Iran Espionage/Import question, AMD is counting on the fact that the Pentagon gets along with the UAE far better than they do China.
- slide 2 of 4
For Your Eyes Only?
Having sensitive information fall into Iranian hands is definitely to be avoided. The problem is blurring the distinction between enforcing an existing embargo on commonly available commercial products and negating a new potential threat posed by the AMD transaction.
Senator Jon Kyl (R-Az) sent a letter to the Secretary of the Treasury, who is the CFIUS chairman, stating that “some of these re-exported goods [from the US to UAE to Iran] involve sensitive technology, the sale of which is barred by U.S. law.” (Inside the Ring) It is fine and good to point out that there is a violation of embargo law taking place, but arguing that Iran having publicly available chips is a national security concern that CFIUS can address, raises questions.
CFIUS isn’t supposed to mitigate a transaction if the concern is already covered in other legislation - they aren’t an enforcement branch meant to punitively block investments from countries that run afoul of other laws. Senator Kyl sent his letter to the right Department, but may have wanted to CC the Treasury’s Office of Foreign Assets Control (OFAC) since they look after the Iranian Transaction Regulations, or the Commerce Department’s Bureau of Industry and Security (BIS) who oversee the Export Administration Regulations.
If AMD is involved in low-profile work with the Pentagon, then there is a legitimate concern for CFIUS. A previous article mentioned that it is a challenge, but by no means impossible, for a large company to make sure only some, carefully vetted, people are privy to, or even aware of, sensitive military projects. CFIUS has to make sure these sorts of controls are in place, and if not, impose them.
- slide 3 of 4
How Many F-16s Did the UAE Buy?
Eighty. About $6.4 billion worth. And they buy a lot of other stuff too, from the US and the EU/UK, including almost $10 billion of US air defense gear, like Patriot missiles and electronic countermeasure upgrades for the fighter planes, earlier this year. Plus, the UAE is in a very interesting spot as far as keeping an eye on Iran, and shipping in the Gulf, and they are pretty generous about the US using their ports, air space, and so on.
If letting the government of Abu Dhabi buy part of AMD is a national security concern, one would think that selling them a modern air force complete with electronic warfare systems would have caused a problem.
- slide 4 of 4
But DP World Got Messed Up and Dubai is Part of the UAE
Yes, but remember that CFIUS originally let the deal through, which led to enough public outcry to have Congress discuss legislation against it, which the President even threatened to veto. DP World sold off the US parts of the deal to avoid further problems.
It is likely that the public is less prone to get riled up over chips in foreign hands than domestic ports in foreign hands. Also, handing over the keys to ports is a pretty big deal, infrastructure and security wise. Like handing over keys to a car or your PIN number; you can really like someone and still not do it.
If trying to figure out which way CFIUS is going to go hasn’t gotten complicated enough for you yet, don’t forget that CFIUS reports to the President and is made up of his appointees. We examine this aspect and wrap up our look at AMD’s CFIUS review in the next article.
Do Recent Changes to CFIUS and a New White House Complicate Needed Approvals for AMD’s Asset Lite Plans?
- AMD Seeks Approval For Foundry Spin-Off from an Ever Changing CFIUS
- AMD’s CFIUS Approval Hinges on Many Factors
- CFIUS Must Consider AMD’s Position as Military Supplier when Vetting Abu Dhabi Deal
- AMD’s CFIUS Approval Based on US-UAE Relations
- Which White House is Handling AMD and Abu Dhabi’s CFIUS Review?